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Technical indicators: neutral to bearish

Oil prices retreat from earlier highs, despite a weaker dollar against the euro and firmer European equities. Crude oil prices have reached the upper end of the trading range (83.50 dollars) and thus analysts urge caution. The ongoing strike in France provides support.

The surprise cut of interest rates by the Bank of Japan tempted investors to go long Tuesday, accumulating buying positions and supporting oil prices. The temporary closure of a Houston Shipping Channel and the strike of French oil workers mainly accounted for the rise in crude oil.

ICE Gasoil October is expected to open 2.00 to 3.50 dollars higher at about 726.50 dollars/ton after settling at 723.75 dollars (official settlement price) Tuesday night. This was 3.25 dollars below Monday's settlement. Volume with some 47,300 deals on average.

The short-term uptrend is still strong. Both RSI and Stochastic indicators are still in overbought territory but give no clear signals this morning. Analysts reckon with a technical downward correction, but for the time being the euro/dollar parity has the biggest influence on the oil prices. First WTI crude support line at 81.50 dollars today, first resistance line at 83.00 dollars.

U.S.

Nymex Access : Oil futures little changed in Asian trading hours and NYMEX electronic trading this morning but show some volatility. No news in the markets. The traded volume is on average. Traders eye the release of DOE data in the afternoon.

Survey of US petroleum inventories :

APIs: crude oil +4.442; distillates -0.777; gasoline -4.059 million barrels vs previous week. Refinery utilization -2.0 % = 81.6%

DOEs: due out tonight

Forecasts : crude oil -0.1; distillates -0.6; gasoline -0.3 million barrels vs previous week. Refinery utilization: -0.4%

Houston (ex-wharf indications 5-10)

380cst: $472
180cst: $493
MGO: $747
Very tight avails for 180cst

New Orleans (ex-wharf indications 5-10)

380cst: $475
180cst: $496
MGO: $750

Singapore (correct as of 1430hrs local time)

Crude is surging with WTI +$1.25. Singapore paper is reacting with 180cst +$7.00 and 380cst +$7.50 for Oct, and Nov 180 cst +$7.20 and 380cst +$7.30 with MGO Oct contracts +$1.51 and for Nov at +$1.42. The cargo market is looking for direction with 180cst -$0.06, 380cst -$0.08 and MGO +$0.28.

The Singapore fuel oil prices were ranging from flat to more than $1.0 during the Platts window as 380cst cargo discount fell to only -$1.7/mt from -$3/mt yesterday. The delivered premiums were app. $2.0 above cargo prices yesterday.

High premiums for prompt deliveries:

380cst: $475
180cst: $484
MGO: $710

Fujairah (delivered indications 6/10)

380cst: $481
180cst: $502
MGO: $745

Rotterdam

Yesterday (Only barge trade deals of >2 KT reported) 116KT was traded in the MOC between 457.00-461.00 with Litasco as the main seller to a mixed bag of buyers.

Relatively weak avails keep the HSFO markets supported. The East bound arbitrage seems to become at workable levels again, also underpinning the local markets. Two VLCC's are reported to be fixed for October loading. The LSFO markets have seen many cargoes arriving, with more scheduled to arrive out of the US next week. But the steep contango structure is keeping the storages filled.

380cst: $465
(1.0%): $483
180cst: $489
(1.0%): $508
DMB: N/A
MGO 0.1%S: $734